OPEC cut downs could cost Gulf economies up to four billion dollars

Ministers of the 11-member OPEC are gathering today at the group's Vienna headquarters to consider adopting a tighter oil output policy, seeking to dodge a price slump next year. If OPEC makes good on

Ministers of the 11-member Organization of Petroleum Exporting Countries (OPEC) will be gathering today, December 12, at the group's Vienna headquarters to consider adopting a tighter oil output policy. A two-tier proposal, drafted by OPEC linchpin Saudi Arabia, recommends cutting production by as much as two million barrels per day (bpd) and at the same time raising output quotas by up to 1.5 million bpd.

Seeking to dodge a price slump next year, the OPEC set official production targets at 21.7 million bpd. However, the cartel has been finding it increasingly difficult to rein in its quota-busting members and OPEC’s actual November output—excluding sanction-hit Iraq—totaled 24.1 million bpd. Overproduction is undermining the group's goal of keeping prices at around $25 a barrel.

If OPEC makes good on the production slash, the six-member Gulf Cooperation Council (GCC) states—including OPEC’s Saudi Arabia, Kuwait, United Arab Emirates (UAE) and Qatar, along with small independent producers Oman and Bahrain who generally support the cartel's policies—could expect to loose up to four billion dollars this year.

According to the Center for Global Energy Studies (CGES), the oil-rich GCC is projected to see its income from crude sales fall to $97.9 billion in 2002, from nearly $101.7 billion in 2001 and $127.2 billion in 2000. As a whole, OPEC's gross crude export sales are projected to plunge to $169 billion in 2002, from $166 billion in 2001. — (menareport.com)